In the U.S., the number of Americans applying for unemployment benefits fell last week to the lowest level in five years, evidence that employers are cutting fewer jobs and may step up hiring.

Meanwhile, the U.S. Energy Information Administration said oil supplies rose by 2.8 million barrels last week, more than analysts expected. That pushed oil stockpiles to 363.1 million barrels, up 8.5 per cent from year-ago levels.

But gasoline supplies dropped by 1.7 million barrels as demand rose and refineries slowed down, according to the Energy Department's statistical arm. Analysts had been expecting an increase in gasoline stocks.

On Wednesday, oil dropped by $1.45 a barrel after crude shipments through the Seaway pipeline from Cushing, Okla., to refineries on the Gulf Coast had to be cut to less than half because of limited capacity. Supplies of benchmark crude at the crucial Cushing hub remain at the highest level in 20 years. That's expected to fall as the pipeline carries more crude.

In other energy futures trading on the Nymex, wholesale gasoline rose three cents to finish at US$2.86 a gallon (3.79 litres), heating oil added less than a penny to finish at US$3.09 a gallon, and natural gas fell 11 cents to end at US$3.45 per 1,000 cubic feet.